On her way to becoming a doctor, Shilpa Lakhani took an economics course, and the rest is history. A pre-med student at Barnard, it was that class that ignited a fascination in asset management that felt more compelling than the lure of medical school. Today, Lakhani is a 20-year veteran of the industry and currently the chief investment officer of Wilton Re, overseeing nearly $40 billion in assets.

She spoke with us about her start in the industry, her views on public and private credit, and her current take on the financial markets, among other things.

How did you get started in the industry?

I was actually a pre-med major but took a class that changed the course of my career. It was a financial economics class, and I still remember learning about modern portfolio theory and the efficient frontier and thinking, ‘I could do this for the rest of my life.’ Relative to the rest of my cohort headed for investment banking, I thought a career on the buy-side would be a much better fit for me. I landed a summer internship with Deutsche Asset Management which turned into a full-time role on the fixed-income portfolio management team. I spent 20 years at what is now DWS managing assets for insurance companies, and in my latest role was Head of Portfolio Management, Fixed Income Solutions. I joined Wilton Re as CIO in January.

What is your overall view of the current market environment?

I do think the macro environment is in a unique position at the moment. There seems to be a divergence between hard data and soft data, due to policy and fiscal uncertainty, and I do see the global economy in a dangerous balance. Despite the Trump administration turning a bit softer on the threat of tariffs, I think some of the damage to growth and productivity may have already been realized in the US. My fear is that some of the uncertainty that started after ‘Liberation Day’ slowed activity. US growth has been fairly resilient thus far, but the labor market has softened and higher effective tax rates have stoked fears that core inflation may rise or at least be more sticky. One of the underappreciated risks is the potential for stagflation, and another is the potential lessening of US dominance. And, of course, this puts the Federal Reserve in a very difficult situation, all amid a changing of the guard next year, which may increase the risk of monetary policy error.

To what extent have you integrated private markets investments into your portfolio and how do you see that evolving over time?

My background is in public markets, so I have a natural bias towards that, but I’m trying very hard not to fall into that behavioral trap. You can’t ignore the trend of privates expanding in the market in recent years, and there is clearly a place for privates in an insurer’s investment portfolio. Over the past year or so it’s become such a generalized, cliched term, so you have to be careful how you model privates in the context of an insurer’s balance sheet. Private placements, for example, is a large area of interest for us and I don’t think they’re usually encapsulated in that ‘privates’ generalized term. But true private placements really give us access to larger-cap issuers with more resilient balance sheets, which means favorable capital treatment and significant excess spread. Away from true private placements, we are very mindful about allocating private equity capital to GPs with consistent and proven performance track records. I also think that on the private credit side, many alternatives’ managers have offered creative solutions for insurers like us to gain exposure to the asset class through rated feeder notes and CLOs.

How do you view investing from an active vs. passive perspective?

We know that beta is outperforming alpha, and the risk/reward under current market conditions favors beta, but for insurers alpha is still very important. With beta you capture all the upside and all the downside, but I have to do whatever I can to protect Wilton’s portfolio from the downside risk. That means identifying the right partners and managers and working with them to find the balance between capital preservation and maximizing book income.   

Diversity within the ranks of asset management is an important consideration at PGIM, and throughout the industry overall. Can you offer your views on the role diversity plays in your business?

I see the benefits of diversity through the lens of different backgrounds. Whether it be education, your career experience, even a pivot in a career – all of that can be really beneficial and accretive to an employer. I would say it doesn’t necessarily have to be based on gender, race, or ethnicity – it’s more so looking at a particular life experience and finding the benefits of the diversity within those views and leveraging that to provide the best solutions for your organization.  

AI continues to be one of the big stories for investors. Any thoughts on the role of that in the investment management business (i.e., to what extent have you been able to leverage AI in your role)?

I do hear folks on the liability side here being more proactive with integrating AI into their daily processes, but on the assets side, as part of our criteria, we want to work with managers who are investing in technology to optimize their services. At Wilton, on the predictive AI side, are we using it on a daily basis? Sure. When it comes to sifting through research, summarizing risk for holdings or optimizing our daily functions it’s certainly useful. But I’m careful on the generative AI side and how it could be used for investing. The verdict isn’t out just yet.

What is the biggest challenge in your role?

There are any number of risks, whether it be market risks, macro risks, or geopolitical risks, but what is creeping up on my list is regulatory risk. We have a presence in Bermuda and in the US in multiple states, and I’m very mindful that as the investment universe evolves, so will the regulatory landscape to keep up with it all. I mentioned earlier the creative solutions of some alts managers, but there is also risk that regulators will be quicker to adapt to the changing backdrop than many investors might think.

What do you like to do to unwind outside of the office?

I’m an avid tennis player and have really held off on playing pickleball simply out of principle, but I was visiting my sister-in-law last year and ultimately sold out. For the next week I played pickleball daily for two hours! I really enjoy it now, along with tennis, and I love watching Indian Idol, the Indian version of American Idol, with my daughter to unwind.